Testamentary Usufruct under Swiss Law
Testamentary usufruct is a lifelong real right created in favour of an heir, generally the surviving spouse, allowing them to use and collect the fruits of the estate assets during their lifetime, while bare ownership reverts to the other heirs (often the children). This legal figure is particularly important in the context of blended families. PBM Avocats advises you in Geneva and Lausanne on succession planning and usufruct.
The Surviving Spouse's Usufruct in Succession Law (art. 473 SCC)
Art. 473 SCC provides a special provision for blended families. The testator may attribute to their surviving spouse the usufruct of the entire share devolved to children from another relationship, provided that those children receive at least their forced share in bare ownership:
- The children receive the bare ownership of their share of the estate
- The surviving spouse receives the usufruct on that same share
- The children's forced share (1/2 of their statutory share) must imperatively be attributed to them, even in bare ownership
- If the spouse remarries, the children may request the conversion of the usufruct (art. 473 para. 3 SCC)
Rights and Obligations of the Usufructuary
| Rights of the Usufructuary | Obligations of the Usufructuary |
|---|---|
| Use the asset (occupy the property, use the furniture) | Preserve the substance of the asset |
| Collect the fruits (rents, interest, dividends) | Pay the charges and taxes related to the asset |
| Administer the asset (but not sell it) | Maintain the asset in good condition |
| Sublet or assign the usufruct (with bare owner's agreement if provided) | Not change the purpose of the asset |
Creation of the Usufruct: Will or Succession Agreement
The testamentary usufruct may be created in two ways:
- By will (arts. 498 et seq. SCC): the testator may provide for the usufruct unilaterally. It may be revoked or modified until death. The authentic form (notarial deed) or holograph form (entirely handwritten, dated and signed) is required depending on the canton
- By succession agreement (arts. 512 et seq. SCC): bilateral agreement between the future deceased and the beneficiary (or between two future deceased persons). Irrevocable in principle. Requires the authentic form (notarial deed)
Testamentary Usufruct and Taxation
The taxation of testamentary usufruct varies by canton. Key points:
- Inheritance taxes (cantonal) apply to the total value of the right (bare ownership + usufruct), but the value of the usufruct may be taxed in the name of the usufructuary
- The value of the usufruct is calculated according to actuarial tables (capitalisation of income according to the life expectancy of the usufructuary)
- The income from the usufruct (rents, dividends collected) is taxable as income of the usufructuary
- In cantons exempting spouses and descendants from inheritance tax (Geneva, Vaud for spouses), the usufruct may be tax-neutral
Extinction of the Usufruct and Succession Partition
Upon extinction of the usufruct (generally at the death of the usufructuary), full ownership is reconstituted in the hands of the bare owners. If there are multiple bare owners (children), the estate of the usufructuary does not include the assets encumbered by the usufruct, which automatically revert to the bare owners.
Disputes between the usufructuary and bare owners frequently concern:
- Maintenance and repairs (who bears the cost of major repairs?)
- Management of investments (securities portfolios, rental properties)
- Sale of the encumbered asset (requires agreement of both the usufructuary and bare owner)
- Accounting for charges and income during the usufruct
What is the testamentary usufruct of the surviving spouse in Switzerland?
The testamentary usufruct of the surviving spouse is a lifelong real right allowing the surviving spouse to use and collect the fruits of the inherited assets, while leaving bare ownership to the deceased's children. It is provided for in art. 473 SCC for blended families (children from a previous relationship), but may also be voluntarily created by will or succession agreement.
Is usufruct in favour of the spouse always possible even if the deceased had children from another relationship?
Yes, this is precisely the situation envisaged by art. 473 SCC. The testator may attribute to their surviving spouse the usufruct on the share devolved to the children from a first relationship, provided the forced share of these children is respected. The forced share of children from another relationship must be reduced to bare ownership and not to zero. This provision is common in blended families.
What are the rights and obligations of the usufructuary?
The usufructuary has the right to use the asset and collect its fruits (rents, interest, dividends). They must preserve the substance of the asset (not destroy it), pay the charges and taxes related to the asset, maintain the asset in good condition, and not change its purpose without the bare owner's agreement. The usufructuary bears the current charges, while major repairs are in principle the responsibility of the bare owner.
Can the usufruct be converted into an annuity or capital?
Yes. In certain cases, it is possible to convert the usufruct into a life annuity or capital, if the bare owners and the usufructuary consent. This conversion may be interesting from a tax or practical standpoint (if the usufructuary does not wish to manage real estate, for example). The conversion value is calculated according to actuarial tables taking into account the age and life expectancy of the usufructuary.
How is the testamentary usufruct extinguished?
The testamentary usufruct is extinguished principally by the death of the usufructuary (lifelong character). It may also be extinguished by renunciation by the usufructuary, by their remarriage (art. 473 para. 3 SCC: in the event of remarriage of the surviving spouse, the children may request partition), or by other legal grounds (merger of rights, non-use for 30 years for real property rights).